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The Things Every Policyholder Ought to Know About Subrogation

Subrogation is a concept that's well-known among insurance and legal firms but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand the nuances of how it works. The more information you have, the better decisions you can make about your insurance policy.

Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, for instance, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is often a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance firms often decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when all the facts are laid out, they weren't actually in charge of the expense.

Let's Look at an Example

You go to the doctor's office with a gouged finger. You give the nurse your medical insurance card and he takes down your coverage details. You get stitched up and your insurer gets an invoice for the medical care. But the next afternoon, when you get to your workplace – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance company. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Should I Care?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by raising your premiums. On the other hand, if it has a proficient legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as business law springville ut, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance agencies are not the same. When comparing, it's worth looking at the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.

Subrogation and How It Affects You

Subrogation is a concept that's understood among insurance and legal firms but often not by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to comprehend the nuances of how it works. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.

Any insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good in a timely manner. If you get injured at work, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and delay sometimes adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a path to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.

Let's Look at an Example

You are in a traffic-light accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and his insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as business law salem ut, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurance agencies are not created equal. When comparing, it's worth contrasting the records of competing agencies to determine if they pursue valid subrogation claims; if they do so without delay; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.

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